Syllabus

Paper 6B Auditing
1. Auditing Basics Major influences of auditing; nature and scope of auditing; basic concepts of auditing; role of evidence in auditing; auditing techniques and practices generally accepted auditing standards; the concept of materiality in auditing. Fixed assets, investments, inventories, debtors, loans and advances, cash and bank balances, debentures and creditors, provisions for taxation, proposed dividend and gratuity other items in the balance sheet; verification of items in the profit and loss account; contingent liabilities; disclosure of accounting policies, practice; expenditure during the period of construction; adjustments for previous year provisions of the Companies Act, 1956 regarding accounts. Restructure Statistical sampling in auditing. Use of ratios and percentages for comparison and analysis trends - inter-firm and intra-firm comparison. Companies Act Provisions relating to Audits Auditors' appointment, remuneration, removal, rights of statutory auditors, duties of statutory auditors, joint auditors, branch audits. report versus certificate, contents of the reports, qualifications in the report. relevant provisions of the Companies Act, 1956 and the Income-tax Act, 1961. Interface between statutory auditor and internal auditor. Corporate Governance Review and Audit of Internal Control Systems Nature and scope of internal auditing, financial versus operational audit; concepts of efficiency audit, propriety audit, voucher audit, compliance audit, pre and post audits. CARO Audit Report Internal auditing function Planning and process of internal audit Verification of evidence, detailed checking versus Q-6.105

(50 marks)

2.

3.

4. 5.

sampling plans, statistical sampling as used in internal auditing; flow chart techniques. Internal control, nature and scope, internal auditor and internal controls. Field work, collecting evidences, interviews; memoranda. Audit notes and working papers. Audit reports - techniques of effective reporting; follow up of audit report. Summary reports of top management. Communications in internal auditing - improving auditor-auditee relationship. Scope of Audit Committee Internal audit and investigation of fraud Information System Audit Introduction to Management Audit

Q-6.106

Bird's-Eye View
Paper 6B Auditing Question Paper Based Contents of Last Five Examinations Years Q. No. Chapter Page No. No. Name 2008 5. Dec. (a) (b) (c) (d) (e) (f) (g) (a) (b) (c) (d) (e) (a) (b) (c) (d) (e) (f) (a) (b) (c) (d) (e) (f) (g) (a) (b) (c) (d) (e) (f) (g) 1 2 11 13 9 4 4 5 10 9 2 1 2 13 2 4 8 5 13 13 8 2 14 10 2 Auditing Techniques and Practices Verification of Assets and Liabilities Planning of Internal Audit Flow Chart Techniques CARO and Internal Audit Statutory Auditors " " " Audit Report Organisation of Internal Auditing CARO and Internal Audit Verification of Assets and Liabilities Auditing Techniques and Practices Verification of Assets and Liabilities Flow Chart Techniques Verification of Assets and Liabilities Statutory Auditors Internal Auditing Audit Report Flow Chart Techniques " " " Internal Auditing Verification of Assets and Liabilities Internal Control Organisation of Internal Auditing Verification of Assets and Liabilities 120 128 168 172 162 142 149 153 166 162 128 120 129 173 129 142 160 153 173 173 160 129 176 166 129 182 129 182 185 182 185 189

6.

7.

8.

2009 5. June

17 Internal Auditor and the Investigation of Frauds 2 Verification of Assets and Liabilities 17 Internal Auditor and the Investigation of Frauds 19 Information Systems Audit 17 Internal Auditor and the Investigation of Frauds 19 Information Systems Audit 20 Management Audit Q-6.107

6.

7.

8.

(a) (b) (c) (d) (e) (a) (b) (c) (d) (e) (a) (b) (c) (d) (a) (b) (c) (d) (e) (f) (g) (h) (a) (b) (c) (d) (e) (f) (g) (a) (b) (c) (d) (e) (f) (a) (b) (c) (d) (e)

20 2 1 2 1 4 2 19 9 1 19 1 8 4

Management Audit Verification of Assets and Liabilities Auditing Techniques and Practices Verification of Assets and Liabilities Auditing Techniques and Practices Statutory Auditors Verification of Assets and Liabilities Information Systems Audit CARO and Internal Audit Auditing Techniques and Practices Information Systems Audit Auditing Techniques and Practices Internal Auditing Statutory Auditors

189 129 120 129 120 142 129 185 162 120 185 120 160 142 182 129 186 142 153 129 155 142 120 129 158 186 189 143 129 162 143 131 120 129 129 189 186 163 162 168

2009 5. Dec.

6.

7.

8.

17 Internal Auditor and the Investigation of Frauds 2 Verification of Assets and Liabilities 19 Information Systems Audit 4 Statutory Auditors 5 Audit Report 2 Verification of Assets and Liabilities 6 Divisible Profits 4 Statutory Auditors 1 Auditing Techniques and Practices 2 Verification of Assets and Liabilities 7 Auditor and Internal Auditor 19 Information Systems Audit 20 Management Audit 4 Statutory Auditors 2 Verification of Assets and Liabilities 9 CARO and Internal Audit 4 Statutory Auditors 2 Verification of Assets and Liabilities 1 Auditing Techniques and Practices 2 Verification of Assets and Liabilities 2 " " " " 20 Management Audit 19 Information Systems Audit 9 CARO and Internal Audit 9 " " " 11 Planning of Internal Audit Q-6.108

(f) (g) (h) (i) 2010 5. June (a) (b) (c) (d) (e) (f) (g) (a) (b) (c) (d) (e) (a) (b) (c) (d) (e) (f) (a) (b) (c) (d) (e) (a) (b) (c) (d) (e) (f) (g) (a) (b) (c) (d) (e) (a) (b)

14 1 2 5 1 4 16 4 20 9 9 1 2 19 11 4 2 2 4 19 2 2 2 2 9 5 20 2 4 4 4 4 1 19 20 19 9 4 5 1 1

Internal Control Auditing Techniques and Practices' Verification of Assets and Liabilities Audit Report Auditing Techniques and Practices' Statutory Auditors Auditing of Enterprises Statutory Auditors Management Audit CARO and Internal Audit " " " Auditing Techniques and Practices' Verification of Assets and Liabilities Information Systems Audit Planning of Internal Audit Statutory Auditors Verification of Assets and Liabilities " " " " Statutory Auditors Information Systems Audit Verification of Assets and Liabilities " " " " " " " " " " " " CARO and Internal Audit Audit Report Management Audit Verification of Assets and Liabilities Statutory Auditors " " " " " " " " " Auditing Techniques and Practices Information Systems Audit Management Audit Information Systems Audit CARO and Internal Audit Statutory Auditors Audit Report Auditing Techniques and Practices " " " " Q-6.109

176 120 129 153 120 143 180 143 189 162 162 118 129 186 168 143 129 130 143 186 130 130 130 130 162 153 190 130 143 143 143 149 120 186 190 186 162 143 153 120 121

6.

7.

8.

2010 5. Dec.

6.

7.

(c) (d)(i) (ii) (iii) 8. (a) (b) (c) (d) (e) (f) (g) (h)

8 19 19 20 1 1 4 5 9 11 19 20

Internal Auditing Information Systems Audit " " " Management Audit Auditing Techniques and Practices " " " " Statutory Auditors Audit Report CARO and Internal Audit Planning of Internal Audit Information Systems Audit Management Audit

160 186 186 190 118 121 143 154 163 168 186 190

Q-6.110

Frequency Table Showing Distribution of Marks

Chap. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. Chapter Name
Auditing Techniques and Practices Verification of Assets and Liabilities Analysis of Trends Statutory Auditors Audit Report Divisible Profits Auditor and Internal Auditor Internal Auditing CARO and Internal Audit Organisation of Internal Auditing Planning of Internal Audit Verification of Evidence Flow Chart Techniques

Years 06 06 07 07 08 08 09 09 10 10 Total June Dec. June Dec. June Dec. June Dec. June Dec. 10 28 8 22 12 16 8 4 10 6 5 12 8 4 14 Q-6.111 8 8 4 12 16 8 4 4 6 5 4 10 29 5 23 23 32 35 8 30 7 38 4 20 4 3 8 8 6 6 2 2 4 2 4 4 10 8 6 6 10 12 4 2 2 5 6 10 4 14 4 4 18 14 12 6 18 6 24 14 2 69 237 12 158 66 5 18 45 48 16 29 25 56

Ave. 6.9 23.7 1.2 15.8 6.6 0.5 1.8 4.5 4.8 1.6 2.9 2.5 5.6

Chap. No. Chapter Name 14. 15. 16. 17. 18. 19. 20. 21.
Internal Control Audit Notes and Working Papers Auditing of Enterprises Internal Auditor and the Investigation of Frauds Secretarial Audit Information Systems Audit Management Audit Objective Questions

Years 06 06 07 07 08 08 09 09 10 10 Total June Dec. June Dec. June Dec. June Dec. June Dec. 11 8 12 4 5 6 4 5 6 12 6 12 12 10 13 14 8 4 6 4 14 7 6 2 11 7 5 8 2 2 2 20 39 20 12 15 40 21 61

Ave. 2.0 3.9 2.0 1.2 1.5 4.0 2.1 6.1

Q-6.112

Frequency Table Showing Marks of Compulsory Questions

Chap. No. Chapter Name 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14.
Auditing Techniques and Practices Verification of Assets and Liabilities Analysis of Trends Statutory Auditors Audit Report Divisible Profits Auditor and Internal Auditor Internal Auditing CARO and Internal Audit Organisation of Internal Auditing Planning of Internal Audit Verification of Evidence Flow Chart Techniques Internal Control

Years 06 06 07 07 08 08 09 09 10 10 Total June Dec. June Dec. June Dec. June Dec. June Dec. 2 6 8 8 10 2 4 4 6 2 2 4 2 2 2 8 6 14 48 2 2

Ave. 0.6 1.4 4.8 0.2 0.2

2 2

6 2

0.6 0.2

0.2

Chap. No. Chapter Name 15. 16. 17. 18. 19. 20. 21.
Audit Notes and Working Papers Auditing of Enterprises Internal Auditor and the Investigation of Frauds Secretarial Audit Information Systems Audit Management Audit Objective Questions

Years 06 06 07 07 08 08 09 09 10 10 Total June Dec. June Dec. June Dec. June Dec. June Dec. 7 2 6 4 2 12 12 10 13 14 2 2 2 2 7 2 8 8 4 61

Ave. 0.7 0.2 0.8 0.8 0.4 6.1

Q-6.114

Short Notes

Distinguish Between

Legends for the Graphs

Q-6.115 Descriptive Practical

Auditing Techniques and Practices

This Chapter Includes : Evolution of Auditing; Definitions; Major Influences of Auditing; Nature of Auditing; Scope of Auditing; Role of Evidence in Auditing; Auditing Techniques and Practices; Generally Accepted Auditing Standards; Concept of Materiality in Auditing; Acid Test
Marks of Short Notes, Distinguish Between, Descriptive & Practical Questions

SHORT NOTES
2001 - Dec [5] {C} Write short notes on: (b) Audit risk 2002 - June [5] {C} Write short notes on: (c) Matching concept 2002 - Dec [8] Write short notes on: (a) Fundamental accounting assumptions 2003 - June [8] Write short notes on: (b) Audit risk (d) Continuous audit 2003 - Dec [8] Write short notes on: (a) Disclosure of accounting policies 2006 - Dec [6] Write short notes on: Q-6.116 (5 marks) (5 marks) (4 marks) (4 marks) (4 marks) (4 marks)

Auditing Techniques and Practices

Q-6.117

(a) Audit Risk 2008 - June [5] Write short notes on the following: (a) Generally Accepted Auditing Standards (GAAS)

(4 marks) (4 marks)

DISTINGUISH BETWEEN
2003 - June [2] State the main points of distinction between: (b) Test checking and Routine checking (4 marks) 2010 - June [6] (a) Find out the difference between US-GAAP and IndiaGAAP in respect of R & D. (4 marks) 2010 - Dec [8] (a) Find out the difference between India GAAP & US GAAP in respect of Assets & Liabilities. (2 marks)

DESCRIPTIVE QUESTIONS
2002 - June [1] {C} As an auditor of a company, state your views on the following: (d) A Limited Company selling goods mostly on credit wants to maintain its books of account on cash basis. (5 marks) 2002 - June [4] (a) Discuss the requirements of accounting standards in respect of contingencies and events occurring after the Balance Sheet date. (10 marks) 2002 - Dec [2] Explain the following relationships with reference to the relevant SAPs: (b) Audit Risk and Materiality (8 marks) 2003 - June [4] (b) Is it true that the overall objective and scope of an audit does change in a computerized environment? (8 marks) 2003 - June [7] Briefly discuss about any eight areas in which there are noteworthy differences between India's GAAP and USA's GAAP. (16 marks) 2003 - Dec [1] {C} (b) Briefly furnish your views in connection with the following: (ii) Novel Smelters Ltd. has entered into a contract with Bharat Towers Ltd. for supply in December, 2003 of a cooling tower priced at Rs. 80 lacs against cash payment. The company has not provided for the same but has merely shown it in Notes to the Balance Sheet as on 31.3.2003. (3 marks)

2003 - Dec [4] (b) "The import of hardware and software has brought forth

Q-6.118

SCANNER ICWA Inter Gr. I Paper 6B (New Syllabus)

changes in the conceptual approach to auditing". Do you agree? What are the major phases in the audit of computerised accounts? (7 marks) 2004 - June [1] {C} (a) As an Auditor of X Ltd., a public company, furnish your views on the following, with brief reasons: (i) The company valued at the year end its stock of goods ready for export at realizable value yielding a margin of 10% on cost. (3 marks) (ii) The company requiring to maintain cost accounts and records contents that the statutory auditor need not report on the nonmaintenance of cost records because the provisions of cost audit even not made applicable to it. (3 marks) (iii) Capitalisation of machine erection staff's salary during the erection period and non-technical staff's salary during the construction period. (3 marks) (iv) The company was registered with the Registrar of Companies on 1st October, 2003. The Board of Directors appointed Mr. G as the first Auditor on 4th December, 2003. A new Board of Directors which assumed charge on 30th January, 2004 removed him and appoints you as the statutory auditor. (3 marks) 2004 - June [5] (a) State the need as also the main sources of generally accepted Accounting Principle in India. (9 marks) 2004 - Dec [7] (a) Explain the concept of audit materiality. Also state the relationship between materiality and audit risk. (6 marks) 2005 - Dec [3] (c) Briefly state how compliance procedures are helpful to an auditor. (6 marks) 2005 - Dec [6] (a) About what are Generally Accepted Accounting Principles (GAAP) are concerned with? Discuss about the need for GAAP in India. (6 marks) 2005 - Dec [7] (a) Do you think that related party disclosure is required in the following cases? (i) Two companies have a common director who is able to affect the policies of one of them. (1 mark) (ii) Transactions between an Enterprise and the specified relatives of its key management personnel. (2 marks) (iii) Transaction between an Enterprise and Trade Union which sometimes restricts the freedom of the Enterprise. (1 mark) Ans:- (i) No. (ii) Yes (iii) No. 2006 - Dec [8] (a) Explain how disclosure of accounting policies improve the presentation of financial statements. (6 marks) 2007 - Dec [6] (a) Is the disclosure of accounting policies, mandatory for companies? What should the Auditor do in this regard? (8 marks)

Auditing Techniques and Practices

Q-6.119

2008 - June [4] (b) List three examples of situations in which the techniques of observation can be employed by external auditor. (3 marks) 2008 - Dec [5] {C} Comment on the following statements based on legal provision : (a) US-GAAP is not different that of India. (2 marks) Ans:- (a) False 2008 - Dec [6] (e) Risk occurring due to insufficient or incompetent evidence collected by the auditors to express his opinion on the financial statement is called an Audit Risk. Is the statement correct ? (2 marks) Ans:- Yes false. 2009 - June [6] (c) State the components of Audit risk. (2 marks) (e) Auditors are to observe certain standards in field work and reporting under GAAP/GAAS. - Explain. (4 marks) 2009 - June [7] (e) Find out the difference between Indias' GAAP & US GAAP is respect of: (i) Pre-operative Expense; (ii) Foreign currency transaction. (2 + 2 = 4 marks) 2009 - June [8] (b) How you will conduct the : (i) Physical verification of Fixed Capital Assets; (2 marks) (ii) Idle facilities. (2 marks) 2009 - Dec [6] (a) As per India GAAP there is no requirement as to disclosure of assets and liabilities. State correct position. (2 marks) 2009 - Dec [7] (d) Concept of materiality in audit has no relevance. Do you agree? (2 marks) 2009 - Dec [8] (g) Find out the difference between Indias GAAP and US GAAP in respect of Related party transactions. (2 marks) 2010 - June [5] {C} Comment on the following statements based on legal provisions (No marks for wrong reasons). (a) US GAAP is not different from India GAAP. (2 marks) Ans:- False. 2010 - Dec [5] {C} Comment on the following statements based on legal provisions (No marks for wrong reasons/justification) (f) Statutory Auditor certifies the Statement of Accounts including Balance Sheet with reference to documentary evidence based on Vouchers only. (2 marks) 2010 - Dec [7] (a) (i) A Company has not followed the Accounting Standards. Auditors suggested to finalise the Accounts after complying with relevant accounting standard. Suggest whether there is any way out to finalise the accounts without change at this stage. (2 marks) (ii) IFRS applies to all entities & also to non-individual companies. The ICAI has decided to fully coverage with IFRS from

Q-6.120

SCANNER ICWA Inter Gr. I Paper 6B (New Syllabus)

Accounting period commencing from 1st January 2012. Do you agree? Give correct reasons. (2 marks) (b) Explain the factors which act as guiding measures to the concept of materiality. (4 marks) 2010 - Dec [8] (b) Abnormal losses during construction period has been capitalised. As an auditor, what treatment you suggest. (2 marks)

PRACTICAL QUESTIONS
2004 - June [5] (b) Comment on the following situation: (i) Compensation for an amount of Rs. 75,000 (which is considered material) received from a customer for breach of contract of sale is included in the current year's turnover of sales. (4 marks) (ii) Claim against the company for breach of contract which are the subject of a law suit and await the Court judgment has been shown and included in the current liabilities. (3 marks) Ans:- (i) Amount should be separately shown, (ii) Claim should be shown as a contingent liability by way of a note to Balance Sheet. Space to write important points for revision

Repeatedly Asked Questions No. 1 Question Short Notes on 'Audit risk'. 01 - Dec [5] (b), 03 - June [8] (b), 06 - Dec [6] (a) Frequency 3 Times

Table Showing Marks of Compulsory Questions Year Descriptive Total 06 J 06 D 07 J 07 D 08 J 08 D 2 2 09 J 09 D 10 J 2 2 10 D 2 2